What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-03-07 compared with 2024-03-11 · 293 added, 275 removed, 691 unchanged (45% of the section changed)

8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Omega Flex, Inc.

Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm – Financial Statements (PCAOB ID:

Report of Independent Registered Public Accounting Firm – Internal Control over Financial Reporting (PCAOB ID:

Consolidated Balance Sheets as of December 31, 2023 and 2022

Consolidated Statements of Operations for the years ended December 31, 2023, 2022 and 2021

Consolidated Statements of Comprehensive Income for the years ended December 31, 2023, 2022 and 2021

Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2023, 2022 and 2021

Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021

Notes to the Consolidated Financial Statements

to Consolidated Financial Statements

Report of Independent Registered

Public Accounting Firm – Financial Statements (PCAOB ID:

Report of Independent Registered

Public Accounting Firm – Internal Control over Financial Reporting

Financial Statements:

Consolidated Balance

Sheets as of December 31, 2024 and 2023

Statements of Operations for the years ended December 31, 2024 and 2023

Statements of Comprehensive Income for the years ended December 31, 2024 and 2023

Statements of Shareholders’ Equity for the years ended December 31, 2024 and 2023

Statements of Cash Flows for the years ended December 31, 2024 and 2023

Notes to the Consolidated

Financial Statements

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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and 2023, the related consolidated statements of operations, comprehensive income, shareholders’ equity and cash flows for each

of the three years in the period ended December 31, 2023, and the related notes to the consolidated financial statements (collectively,

of the two years in the period ended December 31, 2024, and the related notes to the consolidated financial statements (collectively,

the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position

of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in

the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the

period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s

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liability claims

described in Notes 2 and 7 of the financial statements, the Company is subject to periodic lawsuits, investigations and claims,

primarily relating to potential lightning damage to its flexible gas piping products (the “Claims”).

The Company accrues

an estimated product liability reserve related to the resolution cost of the Claims for which management believes a loss is probable

of occurring, and the amount of the loss is reasonably estimable and also discloses the aggregate maximum exposure for all open

As of December 31, 2023, the Company accrued a product liability reserve of $947,000 and disclosed that the aggregate

maximum exposure for all current open Claims is estimated not to exceed $3,724,000.

Due to the uncertainty of potential costs to be

incurred related to the Claims, and the uncertainty of the ultimate outcome of each of the individual Claims, management applies significant judgments

and estimates in determining the probability that a loss has been incurred and the amount to accrue for such loss.

described in Notes 2 and 7 of the financial statements, the Company is subject to periodic lawsuits, investigations and claims, primarily

relating to potential lightning damage to its flexible gas piping products (the “Claims”).

The Company accrues an estimated

product liability reserve related to the resolution cost of the Claims for which management believes a loss is probable of occurring,

and the amount of the loss is reasonably estimable and also discloses the aggregate maximum exposure for all open Claims.

As of December

31, 2024, the Company accrued a product liability reserve of $706,000 and disclosed that the aggregate maximum exposure for all current

open Claims is estimated not to exceed $3,620,000.

Due to the uncertainty of potential costs to be incurred related to the Claims, and

the uncertainty of the ultimate outcome of each of the individual Claims, management applies significant judgments and estimates in determining

the probability that a loss has been incurred and the amount to accrue for such loss.

identified the accrual and disclosure of the Claims as a critical audit matter due to the significant judgments made by management when

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audit procedures related to the Claims included the following, among others:

obtained an understanding of the relevant controls related to management’s evaluation

of the Claims for accrual and disclosure and tested such controls for design and operating

effectiveness, including controls around management’s evaluation of the probability

obtained an understanding of the relevant controls related to management’s evaluation of the Claims for accrual and disclosure

and tested such controls for design and operating effectiveness, including controls around management’s evaluation of the probability

that a loss has been incurred and management’s estimate of the amount of the loss.

tested the accuracy and completeness of the underlying data that served as the basis for

management’s estimates of the probability that a loss has been incurred and the amount

of the loss, including payment activity, relevant insurance coverage, lawsuit or claim status,

and any settlement activity.

evaluated the methods and assumptions used by management to develop the estimate of the probability

a loss has been incurred on individual product liability claims and the amount of such loss

through consideration of historical claim and loss experience as well as current claim status.

performed confirmation procedures with the Company’s external legal counsel to corroborate

management’s assertions regarding claim information, claim status, the probability

the Company has incurred a loss, and the estimated amount of any potential loss.

These confirmation

procedures were also used to test the completeness and accuracy of the underlying source

data that served as the basis of management’s estimates.

tested claim and settlement payment activity occurring subsequent to year-end to assess the

reasonableness of management’s estimates and disclosures.

tested the accuracy and completeness of the underlying data that served as the basis for management’s estimates of the probability

that a loss has been incurred and the amount of the loss, including payment activity, relevant insurance coverage, lawsuit or claim

status, and any settlement activity.

evaluated the methods and assumptions used by management to develop the estimate of the probability a loss has been incurred on individual

product liability claims and the amount of such loss through consideration of historical claim and loss experience as well as current

claim status.

performed confirmation procedures with the Company’s external legal counsel to corroborate management’s assertions regarding

claim information, claim status, the probability the Company has incurred a loss, and the estimated amount of any potential loss.

confirmation procedures were also used to test the completeness and accuracy of the underlying source data that served as the basis

of management’s estimates.

tested claim and settlement payment activity occurring subsequent to year-end to assess the reasonableness of management’s

estimates and disclosures.

have served as the Company’s auditor since 2010.

Bell, Pennsylvania

Massachusetts

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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or that the degree of compliance with the policies or procedures may deteriorate.

Bell, Pennsylvania

Massachusetts

AND SUBSIDIARIES

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Current Assets:

Cash and Cash Equivalents

Accounts Receivable - less allowances of $ 1,126 and $ 1,111 , respectively

Cash and Cash

Accounts Receivable - less

allowances of $ 866 and $ 1,126 , respectively

Inventories - Net

Other Current Assets

Current Assets

Total Current Assets

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Other Long Term Assets

LIABILITIES AND SHAREHOLDERS’ EQUITY

LIABILITIES AND SHAREHOLDERS’

Current Liabilities:

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Accrued Compensation

Accrued Commissions and Sales Incentives

Accrued Commissions

and Sales Incentives

Dividends Payable

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Lease Liability - Operating

Other Liabilities

Total Current Liabilities

Lease Liability - Operating, net of current portion

Lease Liability - Operating, net of current

Deferred Taxes

Tax Payable Long Term

Taxes Payable Long Term

Other Long Term Liabilities

Total Liabilities

Commitments and Contingencies (Note 7)

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authorized 20,000,000 shares:

10,153,633 shares issued and 10,094,322 shares outstanding as of December 31, 2023 and December 31, 2022, respectively

10,153,633 shares issued and 10,094,322 shares outstanding as of December 31, 2024 and December 31,

2023, respectively

Treasury Stock

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Retained Earnings

Accumulated Other Comprehensive Loss

Other Comprehensive Loss

Total Omega Flex, Inc.

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Noncontrolling Interest

Total Shareholders’ Equity

Total Liabilities and Shareholders’ Equity

Shareholders’ Equity

Liabilities and Shareholders’ Equity

accompanying Notes which are an integral part of the Consolidated Financial Statements.

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Income Tax Expense

Net Loss (Income) – Noncontrolling Interest

Net Income attributable to Omega Flex, Inc.

Net Loss – Noncontrolling Interest

Net Income attributable

to Omega Flex, Inc.

Basic and Diluted Earnings per Common Share

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in Thousands)

Other Comprehensive Income (Loss):

Foreign Currency Translation Adjustment

Other Comprehensive Income (Loss)

Other Comprehensive Income:

Currency Translation Adjustment

Other Comprehensive Income

Comprehensive Income

Comprehensive Loss (Income) Attributable to the Noncontrolling Interest

Total Other Comprehensive Income

Comprehensive Loss Attributable to the Noncontrolling

Total Comprehensive

accompanying Notes which are an integral part of the Consolidated Financial Statements.

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in Thousands, Except Share Amounts)

Common Stock Outstanding

Paid In Capital

Retained Earnings

Stock Outstanding

Comprehensive

Income (Loss)

Noncontrolling

Shareholders’

December 31, 2020

Cumulative Translation Adjustment

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December 31, 2024

Cumulative Translation Adjustment

Dividends Declared

December 31, 2023

accompanying Notes which are an integral part of the Consolidated Financial Statements.

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Cash Flows from Operating Activities:

Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:

Adjustments to Reconcile Net Income to

Net Cash Provided by Operating

Adjustments to Reconcile Net Income to Net Cash Provided by Operating

Non-Cash Compensation Expense

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Depreciation and Amortization

Provision for Losses on Accounts Receivable, net of write-offs and recoveries

Provision for Losses on

Receivable, net of write-offs

and recoveries

Provision for Losses on

Accounts Receivable, net of write-offs

and recoveries

Deferred Taxes

Provision for Inventory Reserves

Provision for Inventory

Changes in Assets and Liabilities:

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Accrued Compensation

Accrued Commissions and Sales Incentives

Accrued Commissions and

Sales Incentives

Lease Liabilities

Other Liabilities

Net Cash Provided by Operating Activities

Cash Provided by Operating Activities

Cash Flows from Investing Activities:

Capital Expenditures

Net Cash Used In Investing Activities

Cash Used In Investing Activities

Cash Flows from Financing Activities:

Dividends Paid

Net Cash Used In Financing Activities

Cash Used In Financing Activities

Net Increase in Cash and Cash Equivalents

Translation effect on cash

Cash and Cash Equivalents - Beginning of Year

Cash and Cash Equivalents - End of Year

Supplemental Disclosure of Cash Flow Information

Cash paid for Income Taxes

Cash and Cash Equivalents

- Beginning of Year

Cash and Cash Equivalents

- End of Year

Supplemental Disclosure

of Cash Flow Information

Cash paid for Income

Cash paid for Interest

Declared Dividend

Additions to Right-Of-Use Assets obtained from new operating Lease Liabilities

Additions to Right-Of-Use

Assets obtained from new operating Lease

accompanying Notes which are an integral part of the Consolidated Financial Statements.

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and its subsidiaries (collectively the “Company”).

The Company’s audited Consolidated Financial Statements for the years ended December 31, 2023, 2022 and 2021 have been prepared

in accordance with accounting standards set by the Financial Accounting Standards Board (FASB) and Article 5 of Regulation S-X.

amounts from prior years have been reclassified to conform to current year presentation.

All material intercompany accounts and transactions

have been eliminated in consolidation.

The Company’s audited Consolidated Financial Statements for the years ended December 31, 2024 and 2023 have been prepared in accordance

with accounting standards set by the Financial Accounting Standards Board (FASB) and Article 5 of Regulation S-X.

All material intercompany

accounts and transactions have been eliminated in consolidation.

Company is a leading manufacturer of flexible metal hose, which is used in a variety of applications to carry gases and liquids within

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in exchange for those goods or services.

principle of Topic 606 was achieved through applying the following five-step approach:

principle of Topic 606 is achieved through applying the following five-step approach:

Identification

of the contract, or contracts, with a customer — a contract with a customer exists

when the Company enters into an enforceable contract with a customer, typically a purchase

order initiated by the customer, that defines each party’s rights regarding the goods

to be transferred and identifies the payment terms related to these goods.

of the contract, or contracts, with a customer — a contract with a customer exists when the Company enters into an enforceable

contract with a customer, typically a purchase order initiated by the customer, that defines each party’s rights regarding

the goods to be transferred and identifies the payment terms related to these goods.

Identification

of the performance obligations in the contract — performance obligations promised

in a contract are identified based on the goods that will be transferred to the customer

that are distinct, whereby the customer can benefit from the goods on their own or together

with other resources that are readily available from third parties or from us.

evidence of an arrangement for the sale of product must exist.

The Company ships products

in accordance with the purchase order and standard terms as reflected within the Company’s

order acknowledgments and sales invoices.

of the performance obligations in the contract — performance obligations promised in a contract are identified based on

the goods that will be transferred to the customer that are distinct, whereby the customer can benefit from the goods on their own

or together with other resources that are readily available from third parties or from us.

Persuasive evidence of an arrangement

for the sale of product must exist.

The Company ships products in accordance with the purchase order and standard terms as reflected

within the Company’s order acknowledgments and sales invoices.

Determination

of the transaction price —the transaction price is determined based on the consideration

to which the Company will be entitled in exchange for transferring goods to the customer.

This would be the agreed upon quantity and price per product type in accordance with the

customer purchase order, which is aligned with the Company’s internally approved pricing

of the transaction price to the performance obligations in the contract — if the

contract contains a single performance obligation, the entire transaction price is allocated

to the single performance obligation.

This applies to the Company as there is only one performance

obligation to ship the goods.

● Recognition

of revenue when, or as, the Company satisfies a performance obligation — the Company

satisfies performance obligations at a point in time when control of the goods transfers

to the customer.

Determining the point in time when control transfers requires judgment.

Indicators considered in determining whether the customer has obtained control of a good

of the transaction price — the transaction price is determined based on the consideration to which the Company will be

entitled in exchange for transferring goods to the customer.

This would be the agreed upon quantity and price per product type in

accordance with the customer purchase order, which is aligned with the Company’s internally approved pricing guidelines.

of the transaction price to the performance obligations in the contract — if the contract contains a single performance

obligation, the entire transaction price is allocated to the single performance obligation.

This applies to the Company as there

is only one performance obligation to ship the goods.

of revenue when, or as, the Company satisfies a performance obligation — the Company satisfies performance obligations

at a point in time when control of the goods transfers to the customer.

Determining the point in time when control transfers requires

Indicators considered in determining whether the customer has obtained control of a good include:

Company has a present right to payment

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customer purchase order) include sales commissions.

Under Topic 606, these costs may be expensed as incurred for contracts with a duration of

one year or less.

The majority of the Company’s customer purchase orders are fulfilled

Under Topic 606, these costs may

be expensed as incurred for contracts with a duration of one year or less.

The majority of the Company’s customer purchase

orders are fulfilled (e.g.

goods are shipped) within two days of receipt.

- the Company does not offer a warranty as a separate component for customers to purchase.

A warranty is generally included with each purchase, providing assurance that the goods comply

with agreed-upon specifications, and the cost is therefore accrued accordingly, but contracts

do not include any requirement for additional distinct services.

Therefore, there is not

a separate performance obligation, and there is no impact of warranties under Topic 606 upon

the financial reporting of the Company.

Goods - from time to time, the Company provides authorization to customers to return

If deemed to be material, the Company would record a “right of return”

asset for the cost of the returned goods which would reduce cost of sales.

Rebates (Promotional Incentives) - volume rebates are variable (dependent upon the volume

of goods purchased by our eligible customers) and, under Topic 606, must be estimated and

recognized as a reduction of revenue as performance obligations are satisfied (e.g.

shipment of goods).

Also under Topic 606, to ensure that the related revenue recognized would

not be probable of a significant reversal, the four following factors are considered:

A warranty is generally included with

each purchase, providing assurance that the goods comply with agreed-upon specifications, and the cost is therefore accrued accordingly,

but contracts do not include any requirement for additional distinct services.

Therefore, there is not a separate performance obligation,

and there is no impact of warranties under Topic 606 upon the financial reporting of the Company.

Goods - from time to time, the Company provides authorization to customers to return goods.

If deemed to be material, the Company

would record a “right of return” asset for the cost of the returned goods which would reduce cost of sales.

Rebates (Promotional Incentives) - volume rebates are variable (dependent upon the volume of goods purchased by our eligible

customers) and, under Topic 606, must be estimated and recognized as a reduction of revenue as performance obligations are satisfied

upon shipment of goods).

Also under Topic 606, to ensure that the related revenue recognized would not be probable of a significant

reversal, the four following factors are considered:

amount of consideration is highly susceptible to factors outside the Company’s influence.

uncertainty about the amount of consideration is not expected to be resolved for a long period

uncertainty about the amount of consideration is not expected to be resolved for a long period of time.

Company’s experience with similar types of contracts is limited.

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upon estimates of the eligible products expected to be sold.

Accounts receivable, net of allowances, was $17,503,000 as of January 1, 2023.

disaggregated revenue disclosures, as previously noted, the Company’s business is controlled as a single operating segment that

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This analysis did not indicate any impairment of goodwill.

Compensation Plans

Based Compensation Plans

2006, the Company adopted a Phantom Stock Plan (the “Plan”), which allows the Company to grant phantom stock units (“Units”)

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basis, 1/3 per year from the grant date.

details of the Plan are provided in Note 8, Stock-Based Compensation Plans, to the Consolidated Financial Statements included in this

details of the Plan are provided in Note 8, Stock Based Compensation Plans, of the Consolidated Financial Statements included in this

Liability Reserves

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lease transfers ownership of the underlying asset to the lessee by the end of the lease term.

lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably

certain to exercise.

lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise.

lease term is for the major part of the remaining economic life of the underlying asset.

present value of the sum of lease payments and any residual value guaranteed by the lessee

equals or exceeds substantially all of the fair value of the underlying asset.

underlying asset is of such a specialized nature that it is expected to have no alternative

use to the lessor at the end of the lease term.

present value of the sum of lease payments and any residual value guaranteed by the lessee equals or exceeds substantially all of

the fair value of the underlying asset.

underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease

any leases that do not meet the criteria identified above for finance leases, the Company treats such leases as operating leases.

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Company’s reporting unit in its annual impairment test as described in the FASB ASC Topic 350, Intangibles - Goodwill and Other .

costs are charged to operations as incurred and are included in selling expenses in the accompanying consolidated statement of operations.

costs are charged to operations as incurred and are included in selling expenses in the accompanying Consolidated Statements of Operations.

Such charges aggregated $ 900,000 and $ 913,000 for the years ended December 31, 2024 and 2023, respectively.

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and development expenses are charged to operations as incurred.

Such charges totaled $ 433,000 , $ 653,000 , and $ 627,000 for the years ended

December 31, 2023, 2022 and 2021, respectively and are included in engineering expense in the accompanying consolidated statements of

costs are included in selling expense on the consolidated statements of operations.

The expense relating to shipping was $ 2,740,000 ,

Such charges totaled $ 301,000 and $ 433,000 for the years ended December

31, 2024 and 2023, respectively and are included in engineering expenses in the accompanying Consolidated Statements of Operations.

costs are included in selling expenses in the accompanying Consolidated Statements of Operations.

The expenses relating to shipping were

$ 2,726,000 , and $ 2,740,000 for the years ended December 31, 2024 and 2023, respectively.

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subsidiary whose functional currency

is the British Pound and the U.K.

subsidiary’s France subsidiary whose functional currency is the Euro.

The Consolidated Statements

of Operations are translated into U.S.

dollars at average exchange rates for the period.

Adjustments resulting from the translation of

financial statements are excluded from the determination of income and are accumulated in a separate component of shareholders’

Exchange gains and losses resulting from foreign currency transactions are included in the statements of operations in the period

in which they occur.

is the British Pound, the U.K.

subsidiary’s France subsidiary whose functional currency is the Euro, and cash and accounts receivable

denominated in Canadian dollars.

The Consolidated Statements of Operations are translated into U.S.

dollars at average exchange rates

for the period.

Adjustments resulting from the translation of financial statements are excluded from the determination of income and

are accumulated in a separate component of shareholders’ equity.

Exchange gains and losses resulting from foreign currency transactions

are included in the statements of operations in the period in which they occur.

Company accounts for tax liabilities in accordance with the FASB ASC Topic 740, Income Taxes .

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Comprehensive Income

the years ended December 31, 2023, 2022 and 2021, respectively, the components of other comprehensive income consisted solely of foreign

currency translation adjustments.

the years ended December 31, 2024 and 2023, respectively, the components of other comprehensive income consisted solely of foreign currency

translation adjustments.

Concentrations

customer represented 12% to 14% of sales during each of the fiscal years in the period from 2021 to 2023, and that same customer accounted

for approximately 19% of the accounts receivable balance over the last two years.

No other customer represented more than 10% of accounts

receivable or sales.

Geographically, North America accounted for approximately 93% to 96% of the Company’s sales during the last

three years .

customer represented 15% and 14% of sales during 2024 and 2023, respectively, and that same customer accounted for 23% and 19% of the

accounts receivable balance as of December 31, 2024 and 2023, respectively.

No other customer represented more than 10% of sales or accounts

Geographically, North America accounted for 97% and 96% of the Company’s sales during 2024 and 2023, respectively.

The remaining portion of sales for each respective year was scattered among other countries, with the U.K.

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Financial Statements.

Refer to Note 14, Subsequent Events.

Refer to Note 15, Subsequent Events, to the Consolidated Financial Statements included in this report.

Accounting Pronouncements

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a material impact on the Company’s Consolidated Financial Statements.

November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

The ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly

provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description

of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets.

of the guidance is to enable investors to better understand an entity’s overall performance and assess potential future cash flows.

The amendment is effective for fiscal years beginning after December 15, 2023 and interim periods in fiscal years beginning after December

The impact of the adoption did not have a material impact on the Company’s Consolidated Financial Statements.

December 2023, the FASB issued ASU No.

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2023-09 on its Consolidated Financial Statements.

November 2024, the FASB issued ASU No.

2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures

(Subtopic 220-40):

Disaggregation of Income Statement Expenses .

The ASU requires new tabular disclosures disaggregating prescribed

expense categories within relevant income statement captions.

The amendment is effective for annual periods beginning after December

15, 2026 and interim periods in fiscal years beginning after December 15, 2027.

The Company is in the process of evaluating the impact

2024-03 on its Consolidated Financial Statements.

net of reserves of $ 864,000 and $ 692,000 as of December 31, 2024 and 2023, respectively, consisted of the following:

INVENTORIES, NET OF RESERVES

OF INVENTORIES, NET OF RESERVES

(in thousands)

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OF PROPERTY AND EQUIPMENT

Depreciation and Amortization Est.

and Amortization Est.

(in thousands)

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Accumulated Depreciation

Property and Equipment - Net

Property and Equipment

above amounts include capital related items of $ 341,000 and $ 1,349,000 as of December 31, 2024 and 2023, respectively, which had not

yet been placed in service by the Company, and therefore no depreciation was recorded in the related periods for those assets.

and amortization expense was approximately $ 1,099,000 , $ 1,096,000 , and $ 1,020,000 for the years ended December 31, 2023, 2022 and 2021,

respectively.

and amortization expense was approximately $ 1,255,000 and $ 1,099,000 for the years ended December 31, 2024 and 2023, respectively.

OTHER LONG TERM ASSETS

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(in thousands)

Inventories - net

Cash surrender value of life insurance policies

Other Long Term Assets

Company maintains inventories, net of reserves of $ 1,000,000 and $ 0 as of December 31, 2023 and 2022, respectively, which are estimated

to be used beyond the next twelve months, mainly for the corrugated medical tubing (“CMT”) products.

Higher amounts of materials

for the CMT products were initially purchased for cost considerations and because of longer required lead times.

Company maintains inventories, net of reserves of $ 1,000,000 as of December 31, 2024 and 2023, which is estimated to be used beyond the

next twelve months, mainly for the corrugated medical tubing (“CMT”) products.

Higher amounts of materials for the CMT products

were initially purchased for cost considerations and because of longer required lead times.

Company has obtained and is the beneficiary of life insurance policies with respect to past employees.

During 2024, the insured for one

of the policies became deceased which allowed for proceeds to be received from a claim upon the policy of $ 739,000 .

LINE OF CREDIT AND OTHER BORROWINGS

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The Company may terminate the Facility at any time as long as there are no amounts outstanding and may prepay any borrowings.

Prior to this, the Company had been operating in adherence with the December 1, 2017 agreement, as discussed below.

December 1, 2017, the Company agreed to an Amended and Restated Revolving Line of Credit Note (the “Line”) and Third Amendment

to the Loan Agreement with the Bank.

The Company established a line of credit facility in the maximum amount of $ 15,000,000 , maturing

on December 1, 2022 , with funds available for working capital purposes and other cash needs.

The Line was unsecured and extended through

the effective date of the Facility of July 3, 2023.

The loan agreement provided for the payment of any borrowings under the agreement

at an interest rate range of either LIBOR plus 0.75% to plus 1.75% (for borrowings with a fixed term of 30, 60, or 90 days), or Prime

Rate up to Prime Rate plus 0.50% (for borrowings with no fixed term other than to the effective date of the Facility of July 3, 2023),

depending upon the Company’s then existing financial ratios.

The Company was also required to pay on a quarterly basis an unused

facility fee of 10 basis points of the average unused balance of the note.

of December 31, 2023 and as of December 31, 2022, the Company had no outstanding borrowings on the Facility or the Line, as applicable,

and was in compliance with all debt covenants.

of December 31, 2024 and as of December 31, 2023, the Company had no outstanding borrowings on the Facility, and was in compliance with

all debt covenants.

COMMITMENTS AND CONTINGENCIES

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warehousing, and distribution functions.

the Company has numerous contractual obligations in place for the forthcoming year, mainly related to purchase obligations for the Company’s

raw material inventories, totaling $ 12,895,000 .

the Company has contractual obligations in place for the forthcoming year to purchase raw materials totaling $ 10,548,000 .

Contingencies

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interest in the Company;

■ shareholder

voting rights;

incidents of ownership to the Company’s common stock

Units are granted to participants upon the recommendation of the Company’s President, and the approval of the Compensation Committee.

Each of the Units that are granted to a participant will be initially valued by the Compensation Committee at an amount equal to the

closing price of the Company’s common stock on the grant date but are recorded at fair value using the Black-Sholes method as described

Units are granted to participants upon the recommendation of the Company’s Chief Executive Officer and President, and the approval

of the Compensation Committee.

Each of the Units that are granted to a participant will be initially valued by the Compensation Committee

at an amount equal to the closing price of the Company’s common stock on the grant date but are recorded at fair value using the

Black-Sholes method as described below.

The Units follow a vesting schedule, with a maximum vesting of three years after the grant date.

Grants made on or after January

1, 2023, will fully vest three-years from the grant date.

Upon vesting, the Units represent a contractual right of payment for the value

of the Unit and therefore are stated as liabilities in accordance with FASB ASC Topic 718, Compensation - Stock Compensation .

The Units will be paid on their maturity date, one year after all the Units granted in a particular award have fully vested, unless a

specified event occurs under the terms of the Plan, which would allow for earlier payment.

Units granted with value at the maturity date

equal to the closing price of the Company’s common stock as of the maturity date are defined as Full Value Units.

Unless stated

otherwise, all Units described herein are Full Value Units.

Grants made on or after January 1, 2023, will fully vest three-years from the grant date.

Upon vesting, the Units represent a contractual

right of payment for the value of the Unit and therefore are stated as liabilities in accordance with FASB ASC Topic 718, Compensation

- Stock Compensation .

The Units will be paid on their

maturity date, one year after all the Units granted in a particular award have fully vested, unless a specified event occurs under the

terms of the Plan, which would allow for earlier payment.

Units granted with value at the maturity date equal to the closing price of

the Company’s common stock as of the maturity date are defined as Full Value Units.

Unless stated otherwise, all Units described

herein are Full Value Units.

2009, the Board of Directors authorized an amendment to the Plan to pay an amount equal to the value of any cash or stock dividend declared

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As of December 31, 2023, the Company had 6,440 nonvested and unmatured Units outstanding.

In February 2023, the Company

paid $ 673,000 for 5,120 fully vested and matured Units that were granted during 2019, including their respective earned dividend values.

On March 8, 2023, the Company granted an additional 2,536 Units with a fair value of $ 108.47 per Unit on grant date, using historical

In March 2023, 597 unvested Units were forfeited.

On August 25, 2023, the Company granted an additional 1,500 Units with

a fair value of $ 76.04 per Unit on grant date, using historical volatility.

In September 2023, the Company paid $ 133,000 for 1,508 fully

vested and matured Units that were granted during 2019, and $ 72,000 for the 575 fully vested and matured Units that were granted during

2020, 2021, and 2022, including their respective earned dividend values.

In October 2023, the Company paid $ 132,000 for 1,149 fully vested

and matured Units that were granted during 2020 and 2021, including their respective earned dividend values.

In December 2023, the Company

On March 8, 2024, the Company

paid $ 141,000 for 1,875 fully vested and matured Units that were granted during 2020, including their respective earned dividend values.

As of December 31, 2023, the Company had 6,440 nonvested and unmatured Units outstanding.

On March 20, 2024, the Company granted 6,459 Units with a fair value of $ 68.05 per Unit on grant date, using historical volatility.

March 29, 2024, 244 nonvested Units were forfeited.

In September 2024, the Company paid $ 46,000 for 870 fully vested and matured Units

that were granted during 2020, including their respective earned dividend values.

On October 4, 2024, the Company paid $ 31,000 for 422

fully vested and matured Units that were granted during 2021, 2022, and 2023, including their respective earned dividend values.

December 31, 2024, the Company had 9,872 nonvested and unmatured Units outstanding.

Company uses the Black-Scholes option pricing model as its method for determining fair value of the Units.

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244 nonvested forfeited Units.

However, for the year ended December 31, 2022, no awards were forfeited.

For the year ended December 31, 2023, a reversal of $ 22,000 of previously recognized compensation expense

was recognized on 597 nonvested forfeited Units.

total liability related to the Units as of December 31, 2024 was $ 365,000 of which $ 94,000 is included in Other Liabilities, as it is

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to the Plan, in accordance with FASB ASC Topic 718, Compensation - Stock Compensation , the Company recorded compensation expense

of approximately $ 292,000 , $ 156,000 , and $ 506,000 for the years ended December 31, 2023, 2022 and 2021, respectively.

Compensation expense

or income for a given period largely depends upon fluctuations in the Company’s stock price.

of $ 54,000 and $ 292,000 for the years ended December 31, 2024 and 2023, respectively.

Compensation expense or income for a given period

largely depends upon fluctuations in the Company’s stock price.

following table summarizes information about the Company’s nonvested and unmatured Units as of and for the year ended December

SUMMARY OF NONVESTED PHANTOM STOCK UNITS

Weighted Average Grant Date Fair Value

Average Grant Date Fair Value

Number of Units:

Nonvested and Unmatured as of December 31, 2022

Nonvested and Unmatured as of December 31, 2023

Units Expected to Vest and Mature

total unrecognized compensation costs calculated as of December 31, 2023 were $ 316,000 which will be recognized through August of 2026.

Nonvested and Unmatured as of

December 31, 2023

Nonvested and Unmatured

as of December 31, 2024

Expected to Vest and Mature

total unrecognized compensation costs calculated as of December 31, 2024 were $ 265,000 which will be recognized through March of 2027.

The Company will recognize the related expense over the weighted average period of 1.6 years.

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Income Tax Expense

income included foreign income of $ 458,000 , $ 437,000 , and $ 1,500,000 in 2023, 2022 and 2021, respectively.

income included foreign income (loss) of ($ 2,001,000 ) and $ 458,000 in 2024 and 2023, respectively.

income tax expense differed from statutory income tax expense, computed by applying the U.S.

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Foreign Net Operating Losses

Valuation Allowance for Loss Carryover

Compensation Liabilities

Total Deferred Assets, Before Valuation Allowance

Valuation Allowance

Total Deferred Assets

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leases, pursuant to the below.

the U.S., the Company leases a facility in Houston, Texas, which currently provides manufacturing, stocking, and sales operations, with

the lease term running through October 2024, and a facility in Malvern, Pennsylvania, with a three year term ending in December 2024,

that provides warehousing.

Additionally, the Company has an operating lease agreement for its corporate office space in Middletown, Connecticut,

with the lease term ending in June 2027.

the U.S., the Company leases a facility in West Chester, Pennsylvania, which was consummated effective January 2024, with its lease terminating

in February 2030, which provides warehousing and storage, quality control, distribution, and office space.

The Company also leases a

facility in Houston, Texas, which was consummated effective June 2024, with its lease terminating in July 2029, which provides manufacturing,

stocking, and sales operations.

Additionally, the Company leases office space in Middletown, Connecticut, with its lease terminating

in June 2027.

the U.K., the Company leases a facility in Banbury, England, which serves manufacturing, warehousing, and other operational functions.

The lease in Banbury has a 15-year term ending in March 2036.

a lease commencement date of January 1, 2024, the Company leased a facility in West Chester, Pennsylvania providing approximately 28,000

square feet of warehousing and storage, quality control, distribution, and corporate office space.

Subsequent Events to

the Consolidated Financial Statements included in this report.

addition to property rentals, the Company also has lease agreements in place for various fleet vehicles and equipment with various lease

of December 31, 2023, the Company has right-of-use assets of $ 2,940,000 , and a lease liability of $ 2,946,000 , of which $ 454,000 is reported

as a current liability.

As of December 31, 2022, the Company recorded right-of-use assets of $ 3,205,000 , and a lease liability of $ 3,210,000 ,

of which $ 447,000 was reported as a current liability.

The respective weighted average remaining lease term and discount rate are approximately

10.57 years and 1.07 % as of December 31, 2023.

of December 31, 2024, the Company recorded right-of-use assets of $ 4,944,000 , and a lease liability of $ 5,278,000 , of which $ 712,000

is reported as a current liability.

On December 31, 2023, the Company recorded right-of-use assets of $ 2,940,000 , and a lease liability

of $ 2,946,000 , of which $ 454,000 was reported as a current liability.

The respective weighted average remaining lease term and discount

rate are approximately 7.8 years and 3.74 % as of December 31, 2024.

expense for operating leases was $ 939,000 and $ 467,000 for the years ended December 31, 2024 and 2023, respectively.

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SCHEDULE OF FUTURE MINIMUM RENTAL PAYMENTS FOR OPERATING LEASES

Twelve Months Ending December 31,

Operating Leases

(in thousands)

Months Ending December 31,

Total Future Minimum Lease Payments

Lease Liability

Current Portion of Lease Liability

Lease Liability – Net of Current Portion

Current Portion

of Lease Liability

Lease Liability –

Net of Current Portion

EMPLOYEE BENEFIT PLANS

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Company maintains a qualified non-contributory profit-sharing plan (the “Plan”) covering all eligible employees.

$ 484,000 , $ 474,000 , and $ 441,000 of contributions accrued for the Plan in 2023, 2022 and 2021 respectively, which were charged to expense

in those respective years.

$ 476,000 and $ 484,000 of contributions accrued for the Plan in 2024 and 2023 respectively, which were charged to expense in those respective

Contributions

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2024 and 2023 were $ 348,000 and $ 330,000 , respectively.

The participant’s Company contribution vests ratably over

The participant’s Company contribution vests ratably over six years.

SHAREHOLDERS’ EQUITY

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SCHEDULE OF REGULAR QUARTER DIVIDEND PAYMENTS

Dividend Declared

Dividend Paid

Price Per Share

December 6, 2023

January 4, 2024

September 11, 2024

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June 12, 2024

July 10, 2024

March 28, 2024

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April 24, 2023

December 9, 2021

December 30, 2021

September 15, 2021

October 4, 2021

March 24, 2021

April 14, 2021

addition to the above dividend amounts, there were dividends approved by the Company’s foreign subsidiary during September 2021

which amounted to an outlay of cash of $ 129,000 to the foreign subsidiary’s noncontrolling interest.

should be noted that from time to time, the Board may elect to pay special dividends, in addition to or in lieu of the regular quarterly

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The most recent special dividend was declared and paid in December

PARTY TRANSACTIONS

SEGMENT REPORTING

Company derives revenues from the manufacture and sale of flexible metal hose and accessories (the “flexible metal hose”

These applications include carrying fuel gases within residential and commercial buildings;

gasoline and diesel gasoline products

(both above and below the ground) in a double containment piping to contain any possible leaks, which is used in automotive and marina

refueling, and fueling for back-up generation;

and medical gases in health care facilities.

accounting policies of the flexible metal hose segment are the same as described in Note 2.

Significant Accounting Policies.

Operating Decision Maker (“CODM”), which includes the Chief Executive Officer, Executive Chairman, and President, assesses

performance for the flexible metal hose segment and decides how to allocate resources based on the measures which are also reported in

the Consolidated Statements of Operations as Operating Profit and Net Income.

Segment assets are reported in the Consolidated Balance

Sheets as Total Assets.

CODM uses Operating Profit and Net Income to evaluate performance and income generated from segment assets (return on assets) in deciding

whether to reinvest profits into the flexible metal hose segment or into other areas, such as for acquisitions or to pay dividends.

segment expense categories reviewed by the CODM are consistent with the categories reflected in the Consolidated Statements of Operations.

RELATED PARTY TRANSACTIONS

time to time, the Company may have related party transactions (“RPTs”).

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transactions with no indication that they are influenced by the related relationships.

Company evaluated all events or transactions that occurred through the date of this filing.

During this period, one event came to the

Company’s attention that would impact the Consolidated Financial Statements as of and for the period ended December 31, 2023.

a lease commencement date of January 1, 2024, the Company leased a facility in West Chester, Pennsylvania providing approximately 28,000

square feet of warehousing and storage, quality control, distribution, and corporate office space.

SUBSEQUENT EVENTS

October 2024, the Company formed a new U.S.

subsidiary, Flex-Trac, Inc., and effective January 1, 2025, the Company contributed to Flex-Trac,

certain assets related to its MediTrac ® corrugated medical gas tubing business, in exchange for the issuance to the

Company of shares of common stock, par value $ 0.01 per share, of Flex-Trac, Inc.

(“Common Stock”).

addition, in December 2024, subject to the approval of the Company’s shareholders, the Flex-Trac, Inc.

2025 Equity Incentive Plan

(the “Plan”) was approved and adopted, to provide directors, officers, employees, contractors and consultants of Flex-Trac,

or its affiliates an equity-based incentive to maintain and enhance the performance and profitability of Flex-Trac, Inc.

to adjustment as provided in the Plan, up to 818,458 shares of Common Stock, or 7.5 % of the fully-diluted shares of Common Stock, may

be issued pursuant to the Plan with respect to awards.

January 2, 2025, 420,000 shares of restricted stock in the aggregate, or 4 % of the shares of Common Stock, were granted to certain eligible

participants under the Plan, subject to the approval of the Plan by the shareholders of the Company.

Subject to such approval, the awards

vest after eight years of continuous service or earlier upon the grantee’s death, disability or retirement, or a change of control,

as defined and further described in the Plan.

9 – CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data